Once unimaginable, vehicle development alliances between OEMs are quickly becoming the new normal in the light-vehicle industry today, and this is a trend that is expected to accelerate in the years ahead.The alliance between Renault and Nissan formed 15 years ago is picking up momentum, and by 2018, 70 percent of the companies’ models in the United States are expected to be produced under the alliance's new common module families.

General Motors and Fordlast year announced plans to collaborate on the development of higher efficiency nine- and 10-speed transmissions for cars, crossovers, SUVs, and trucks – their second major collaborative effort on transmissions together.

Meanwhile, BMW and Toyotaare jointly developing a mid-sized sports car and have arranged partnerships for engineering fuel-cell systems, lightweight materials, and lithium-air batteries. Toyota has already joined forces with Subaru to develop the smaller BRZ sports car now in production.

The reason is simple: Evolving fuel consumption requirements in North America, Europe, Japan, and China – which comprise about 80 percent of the global car market – will establish a de facto global standard of between 54 and 56 mpg by 2025.This will drive more technological change in powertrains over the next decade than we have seen in any decade since the dawn of the auto industry.

No OEM can afford to take on all of the technological and capital risks alone for such dramatic change over the span of ten years.For OEMs faced with these standards, the low-hanging fruit for achieving the 54 to 56 mpg threshold have been harvested.Engineers have largely reached the limit in gains from basic lightweighting, direct fuel injection, and turbocharging, and there is still a long way to go. It’s safe to say that there is no one “silver bullet” that is going to get the industry all the way to the global standard in one quick step.

The technological advances that will help OEMs reach lofty fuel economy standards are expensive, and yet they deliver smaller and smaller returns.Capital is still tight after the economic shakeout a half decade ago, and automakers face high costs and risks in developing future innovations such as advanced lightweighting, next-generation hybridization technologies, homogeneous charge compression ignition, thermal energy recovery, and advanced boosting, including variable supercharging, turbo-compounding, and compound boosting.

So, how will we get there? We have to acknowledge that no single company has a monopoly on smart people or great ideas, and OEMs and suppliers need to combine R&D resources and engineering budgets to drive innovation throughout the industry.

At Dana, we believe that the key to successfully developing and delivering to market the technological stretch required of the industry over the next decade can only be accomplished through alliances between OEMs and suppliers that take a comprehensive systems approach to re-imagine the vehicle from the ground up.As engineers, we have done everything possible to dissect and optimize the individual components under our control, and it’s time to closely examine the integration of components throughout the vehicle in an effort to fully optimize performance.

Where previous partnerships between light-vehicle manufacturers were built to better leverage geographical supply and distribution chains or marketing synergies, these new alliances will center on promising innovations such as Dana’s VariGlide™ continuously variable planetary technology.The Tier One suppliers that derive the most benefit from these alliances will be those that can venture far beyond the scope of their individual components to have a deeper understanding of how their products integrate into the vehicle as a whole.

To make these alliances successful, we need to do away with the competitive isolation common among suppliers as well as the traditional paternalistic and sometimes antagonistic relationship between OEMs and their suppliers.All participants need to embrace the multi-directional flow of information for every aspect of engineering – ideas, research, data, analyses, testing results, and the like.

To be certain, OEMs that combine engineering forces have to overcome traditional reservations about giving up their competitive advantages by sharing intellectual property. We foresee broad alliances where OEMs and suppliers are willing to take a creative approach toward how they open certain intellectual property to other members of the alliance while still maintaining a level of protection outside the alliance.

This approach carries an element of risk, but the advantages in quickly developing new technologies by sharing capital expenditures and technology risks are tremendous. There are numerous other opportunities for light-vehicle manufacturers to differentiate themselves and maintain a competitive advantage outside the powertrain arena.There will always be a place for great end product design to lead.

The light-vehicle industry faces tremendous engineering challenges in the next decade that will generate more upheaval than we’ve seen in the past 60 years, and the OEMs and suppliers who embrace a new approach to fostering innovation will be those who remain standing.

Over a hundred years ago, Dana was founded at the dawn of the industry to transform the way mechanical power was transmitted from the engine to the wheels, from the old way of chains and sprockets to the new way of driveshafts and universal joints. At that time, hundreds if not thousands of OEMs and suppliers worldwide couldn’t or wouldn’t keep up with the pace of innovations that created the global auto industry as we know it, and those enterprises survive only in the history books. Today, as the industry goes through its greatest transformation since it was formed, it is our belief that collaborative innovation will be the keystone to success in the Carbon Era.

We’d like to hear your thoughts:

Which OEM alliances do you find most intriguing?

What is required to ensure the success of alliances between OEMs?

Which intellectual property should be shared between OEMs, and which should remain closely held?

Which fuel-saving technologies offer the greatest promise for the light-vehicle market

Welcome to Mobility Matters, Dana's new blog on all things technology. Here, we'll share our thoughts on innovations shaping the global vehicular industry today and in the future. We'll examine trends and megatrends impacting the technologies being developed, new discoveries, and interesting observations we've made at industry events.

This is a technology forum where you can interact with our technical experts, as well as exchange and challenge ideas. We hope you enjoy the content and get involved in the discussion.